Tag: Office of Public Guardian and Trustee

21 Apr

If You Die Without a Will, Here is What Happens

Suzana Popovic-Montag Estate Planning, Wills Tags: , , , 0 Comments

The great thing about having a Last Will and Testament is that it clearly spells out what happens to your estate upon your passing. Conversely, the terrible thing about not having this document in place when you die is that you have no control over how your assets are distributed, which may cause anguish and hardship to loved ones you would have otherwise chosen as beneficiaries.

When you die without a will, or intestate, Ontario’s Succession Law Reform Act (the “SLRA”) sets out how your estate is distributed. It provides that unless someone who is financially dependent on the deceased person makes a claim, the first $350,000 is given to the deceased person’s spouse.

A problem that immediately arises is defining the meaning of spouse. For the purposes of intestacy, the SLRA adopts the definition of spouse found in section 1 of the Family Law Act, which reads: “‘spouse means either of two persons who: (a) are married to each other, or (b) have together entered into a marriage that is voidable or void, in good faith on the part of a person relying on this clause to assert any right.

As such, only married spouses are entitled to benefit under the intestacy regime. You may have had a long and loving common-law relationship with a person you regarded as a spouse, but if there is no formal wedding declaration, they could be denied the inheritance you wanted them to receive. A common-law spouse may potentially seek redress by making a dependant’s support claim against your estate, though it is an effort and expense that could have been avoided with a proper will.

If you have no spouse, your children will inherit the estate. Sounds simple enough, but again there may be an issue with the way in which the SLRA defines child, as it only accepts biological offspring or those who were adopted as children. With blended families, many people have developed loving and long-lasting relationships with their step-children. In the eyes of the SLRA, however, they are not given the same inheritance rights as biological and adopted children.

Things get a bit complicated from here. Allow me to summarize:

  • If any children have died, that child’s children will inherit their share.
  • If there is no spouse or children or grandchildren, the deceased person’s parents inherit the estate equally.
  • If there are no surviving parents, the deceased person’s brothers and sisters inherit the estate.
  • If any of the brothers and sisters have died, their children (the deceased person’s nieces and nephews) inherit their share.
  • If there are no surviving brothers and sisters, the deceased person’s nieces and nephews inherit the estate equally. (If a niece or nephew has died, their share does not pass to their children.)
  • When only more distant relatives survive (cousins, great-nieces or nephews, great aunts and uncles), the rules are complex and a lawyer’s advice is a good idea.

There are many other problems that arise with those who die intestate, such as deciding who will be executor and oversee the estate distribution. The closest relative is usually chosen by the courts for the position, which may mean that your children are in charge and not your common-law spouse, which could create tension and expensive legal battles.

If you have minor-age children and there is no other legal parent alive, the appointment of the guardian will be out of your control.

Perhaps you have promised your grandson that he will inherit your valued coin collection when you die. That probably won’t happen, since all assets of the estate will be valued and divided up under the SLRA rules. However, in a will you can leave specific instructions, directing who receives what items you are leaving behind.

You may feel indebted to a charity, church, or hospital for their work while you were alive, and you want to leave that institution some money. Again, that can’t happen without a will.

The final point to consider is that if you have no next-of-kin and you die without a will, your entire estate goes to the Ontario government, with the Office of the Public Guardian & Trustee stepping in to administer your estate and seize your assets.

Drawing up a Last Will and Testament is a simple way to avoid all these issues, saving anguish and needless paperwork when the time comes.

Thanks for reading, and have a great day!

Suzana Popovic-Montag

13 May

A Further Update on the Estate Arbitration and Litigation Management (EALM) Initiative

Suzana Popovic-Montag Estate & Trust, Litigation Tags: , , , , , , , , 0 Comments

We have previously written about the Estate Arbitration and Litigation Management (“EALM”) initiative, which has been spearheaded in an effort to keep estate litigation matters moving forward during the COVID-19 pandemic. Our previous blogs on the EALM initiative can be found here and here.

In its Notice to the Profession dated May 5, 2020, the Ontario Superior Court of Justice announced that it will not resume in-person hearings until July 6, 2020, at the earliest. The notice further states that the scope of matters being heard by courts virtually will be expanded in the near future, but the particulars regarding such an expansion have not yet been released.

While access to the courts remains limited, EALM is available as a means of obtaining assistance in the determination of procedural and/or interim (and certain substantive) matters that are not necessarily urgent in nature and not currently eligible for a virtual court hearing. The matters set out in an EALM agreement can be arbitrated by senior estates practitioners in a timely and cost-efficient manner. EALM arbitrations can take place via teleconference or video conference, depending on the preferences of the parties and the arbitrator.

As previously indicated, EALM is not intended to in any way circumvent the role of the Office of the Public Guardian and Trustee (the “PGT”) or the Office of the Children’s Lawyer (the “OCL”) where the estate matter involves unprotected charitable interests or the rights of persons under legal disability. Since our last blog post regarding EALM was posted, the initiative has received the support of the PGT and the OCL and our precedent EALM agreement has been further updated to recognize the potential role that the PGT and/or the OCL may have in EALM process. Best EALM practices include ensuring that the PGT and/or the OCL are provided with the opportunity to participate, and further include the following:

  • Where any substantive issue to be submitted to arbitration affects the rights of persons under legal disability, or an unprotected charitable interest, the parties must provide notice of their intention to enter into an EALM agreement to the PGT and/or the OCL;
  • The PGT and/or the OCL should be served at the early stages of a matter, particularly when the issues will have a significant effect upon the interests that they represent;
  • Where the PGT and/or the OCL are participating in a proceeding, their consent to proceed to EALM is required;
  • Where it is necessary for a court to appoint the PGT or the OCL as litigation guardian, each office may consider requests to engage in the EALM process after they have been appointed as litigation guardian (rather than prior to their formal appointment); and
  • An arbitrator’s decision to resolve substantive issues involving the rights of persons under legal disability will be considered to be a final settlement, which requires court approval under Rule 7.08 of the Rules of Civil Procedure.

A revised copy of our precedent EALM agreement, which has been updated in consultation with the PGT and the OCL in consideration of the comments set out above, can be found here. An updated list of senior estates practitioners who are prepared to assist as EALM arbitrators is available here. I again thank all of those who have demonstrated an interest in assisting other members of the Estates Bar as arbitrators.

EALM is a cost-effective measure to move matters forward and provides the parties to litigation with more control than the traditional court process. Once the courts resume full operations, we can only anticipate that they will be at full capacity and hearing dates will be in high demand. In light of this, we are hopeful that EALM will continue to assist parties to estate litigation and their counsel as a suitable and efficient alternative to in-court hearings.

If you are interested in introducing EALM into your own practice, or if you are interested in being added to our roster of EALM arbitrators, please contact me at spopovic@hullandhull.com.

Thank you for reading and stay safe.

Suzana Popovic-Montag

11 Feb

Exercising the Discretion to Make Interim Distributions

James Jacuta Estate & Trust Tags: , , , , 0 Comments

What do you do as a lawyer when you represent someone who is waiting to receive money from an estate, but the Estate Trustee will not pay? An interim distribution can commonly be made. The Estate Trustee can hold back some of the funds for potential liabilities and distribute some of the money immediately.  Potential liabilities can involve delayed tax filings related to Canada Revenue Agency (CRA) procedures being slow, or other estate liabilities. Final distribution can be delayed for a matter of 2-3 years, or even longer. As an example, on a $1,000,000 estate, the hold back might be $200,000 on $50,000 of estate liabilities that are known or can be knowledgeably estimated. This safely leaves $800,000 for immediate interim distribution, without waiting years until concluding administration of the estate. However, the practice of the Office of Public Guardian and Trustee  (OPGT) in Ontario is not to do interim distributions. They take the position that even if there is the remotest potential for liability they will not take the risk. As a government entity there is certainly no incentive to take any risk. The following rhetorical question illustrates the problem –  What civil servant in a bureaucratic government agency is going to move quickly to take on liability and risk?

A recent decision clearly directs the Office of Public Guardian and Trustee  (OPGT) of Ontario to make an immediate interim distribution as Estate Trustee.

It is unfortunate, in my view, that anyone would have to take steps to seek an Order in these circumstances. This is what happened in  Foundation for Human Development and Jack Benson v The Estate of Keith Irwin-Reekie, 2020 ONSC 299, with the decision released on January 15, 2020. The court directed an interim distribution by the OPGT, to distribute the inheritance to which the moving parties were entitled. The court found that it was appropriate to exercise discretion under rule 74.15 (1) (i)  “Orders for Assistance” of the Rules of Civil Procedure, Courts of Justice Act. The reasoning was that it was usual practice for estate trustees to make interim distributions out of estates,  “once the Estate Trustee has a good understanding of the taxes and other liabilities of the estate, holding back sufficient funds  in the estate to satisfy those expenses / liabilities”.

Thanks for reading!

James Jacuta

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